Key findings from a survey of over 950 nonprofit leaders show that 31 percent of nonprofits lack enough operating cash to cover expenses for more than one month. Another 31 percent can’t cover even three months. A whopping 93 percent of “lifeline” organizations—nonprofit agencies that provide food and other basic services to the vulnerable—anticipate increasing demand this year with decreasing funding. These startling numbers spell a seismic shift in the nonprofit world.
Over 50 percent of nonprofits surveyed said the recession will have a “permanent negative financial effect on their organizations.”
Nonprofit Finance Fund surveyed nonprofit leaders nationwide. It found that 62 percent of nonprofits expect a decrease in foundation funding. Forty-nine percent anticipate decreased individual contributions and 43 percent decreased government funding.
Asked what course of action nonprofits will take or consider, given their dire financial situation, 65 percent said they were developing “worst-case scenario” budgets.
Almost half identified staff salary and hiring freezes as action steps to deal with their financial crisis, while 41 percent identified staff or salary reductions. Reducing or eliminating programs was a likely action step for 39 percent of nonprofits.
Over 500 of the surveyed nonprofits were located in New England, New Jersey and New York, compared to fewer than 60 in the southeast.
The nonprofits identified themselves according to a variety of activities, with 30 percent being human services, 24 percent being “arts, culture and humanities,” 13 percent being educational and 1 percent being religious.
Clara Miller, NFF’s chief executive, told the New York Times, “It’s very clear how fragile financially many of these organizations are, and especially the ones on the front lines, the safety net or lifeline organizations.”
The survey parallels bleak news stories and other reports.
For example, earlier this month, the Atlanta Journal-Constitution reported that Cobb County’s Center for Family Resources had seen a 30 percent increase over last year in people needing help on a budget some $400,000 smaller than in 2008.
The Silicon Valley Council of Nonprofits reported that 51 percent of surveyed agencies planned to lay off employees, and 47 percent had experienced a drop in contributions.
The YMCA of Southeastern Connecticut announced its closure at the end of April, laying off 100 employees and leaving families without after-school care.
We now face a steady beat of news stories and reports about the deeply troubled nonprofit sector.
In January, an EthicsDaily.com editorial examined the financial troubles of American seminaries and divinity schools, which have spread across the theological spectrum. At the first of December, another editorial said that the financial crisis “will likely result in a survival-of-the-fittest scenario among local and national faith organizations, which, in turn, will reshape the religious ethos for years to come.”
More broadly, we do appear to be marching into an era of social Darwinism for all nonprofits—religious and nonreligious—promising to leave a lot of nonprofit staff members without the means for economic well-being and their clients in even worse shape.
Make no mistake about the future. The impoverishment of the nonprofit sector will impoverish the nation.
We are entering a time of consequence with few, if any, wise scouts to guide us through this barren landscape. Unlike the freed Hebrew slaves, we are guided by neither a pillar of cloud by day nor a pillar of fire by night.
Instead, we rely on ancient memory and insert a creative, contemporary interpretation of what it means for us to do likewise. When Jesus sent out his disciples into a troubled time, he told them to take no gold, no extra tunic, no sandals and no staff. He basically told them to travel light.
What does it mean today for people of faith to travel light through tough times?
Robert Parham is executive editor of EthicsDaily.com and executive director of its parent organization, the Baptist Center for Ethics.